Ocwen Loan Servicing, LLC v. Oden
| Decision Date | 09 September 2020 |
| Docket Number | No. CV-19-539,CV-19-539 |
| Citation | 2020 Ark. App. 384,609 S.W.3d 410 |
| Parties | OCWEN LOAN SERVICING, LLC; and Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust, Not in Its Individual Capacity but Solely in Its Capacity as Owner Trustee of Matawin Ventures Trust Series 2016-2, Appellants v. Travis ODEN and Tina M. Oden, Appellees |
| Court | Arkansas Court of Appeals |
Bradley Arant Boult Cummings LLP, by: Mary Clay Morgan and Marc James Ayers, pro hac vice, for appellants.
Gill Ragon Owen, P.A., Little Rock, by: Kelly W. McNulty and Mitchell S. Dennis, for appellees.
On March 14, 2019, the Saline County Circuit Court granted judgment to appellees Travis Oden and his wife, Tina, against appellants Ocwen Loan Servicing, LLC, and Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust, solely in its capacity as owner trustee of Matawin Ventures Trust Series 2016-2 (collectively referred to as "Ocwen"). The parties had filed competing motions for summary judgment related to a promissory note and deed of trust secured by real property and executed on December 31, 2007, that obligated the Odens, who failed to pay. Ocwen accelerated the note on March 17, 2011, and filed a foreclosure complaint more than five years later on July 26, 2016. On appeal from the circuit court's finding that Ocwen's complaint is barred by the statute of limitations, Ocwen raises three points: (1) the enforcement of the deed of trust is not time-barred because Ocwen abandoned its prior acceleration; (2) Ocwen's payment of taxes and insurance on the property confirmed the debt; and (3) Ocwen has an equitable lien against the property. We affirm.
On December 31, 2007, the Odens executed a note for $132,000 for the real property at 830 Nash Cove, Alexander, Arkansas. The original lender was AAA Worldwide Financial Company d/b/a Worldwide Mortgage Company. A deed of trust was executed to secure the note, granting the lender a mortgage lien on the property. The lender's loan servicer, GMAC Mortgage, LLC, "force placed" insurance on the property, increasing the loan payments. The Odens attempted to meet those increased payments but disputed the force-placed insurance, and their payments were returned to them on several occasions.
The Oden's last payment was in November 2010, and they stopped making payments thereafter. GMAC declared the Odens in default on December 2, 2010. On March 17, 2011, the Odens' loan accelerated, and the notice of acceleration states:
You are currently in default under the terms of your note and deed of trust/mortgage in that you have failed to make the payments due through the date of this letter. The debt has been accelerated. The amount of the debt that we are attempting to collect and the total amount currently due on your loan as of the date of this letter is $134,270.95.
On April 15, 2011, a "Trustee's Notice of Default and Intention to Sell" was filed. The notice declared that default had occurred and the indebtedness was "wholly due." A statutory foreclosure sale of the property was set for June 14, 2011, at the Saline County Courthouse.
GMAC was sued in several class-action lawsuits, and it eventually filed for bankruptcy. On February 16, 2013, Ocwen Loan Servicing, LLC, became the Oden's loan servicer, replacing GMAC. Ocwen had the same address and phone number as GMAC.
On July 27, 2016, a second "Trustee's Notice of Default and Intention to Sell" was filed, setting a statutory foreclosure sale for October 12, 2016. A "Delinquency Notice" dated August 1, 2016, and addressed to the Odens states that as of July 30, 2016, they were 2068 days delinquent on their mortgage loan. Also on July 27, Ocwen gave notice to the Odens that it would no longer service the loan payments after August 15 and that Kondaur Capital Corporation would collect the payments after that date.1 But on August 24, Kondaur's letter to the Odens notified them that it had transferred the loan servicing back to Ocwen as of August 16.2 The letter also stated, "As of August 19, the amount owed on the account is $196,827.42." On September 28, a notice of cancelation of the nonjudicial foreclosure sale was filed.
The Odens filed an amended verified petition for declaratory judgment and request for injunctive relief against Ocwen on June 23, 2017. They alleged that the statute of limitations to enforce a promissory note and deed of trust in Arkansas is five years. Ark. Code Ann. § 16-56-111 (Repl. 2005); Ark. Code Ann. § 18-49-101 (Repl. 2015). They claimed that when there is an optional acceleration clause in the deed of trust, the statute of limitations accrues when the lender or servicer first accelerates the debt. United-Bilt Homes, Inc. v. Sampson , 315 Ark. 156, 864 S.W.2d 861, 862 (1993). The Odens claimed that the loan first became delinquent on December 2, 2010, and the loan was accelerated on March 17, 2011. Thus, Ocwen's action to enforce the loan after March 17, 2016, is barred by the statute of limitations. The Odens asked for a declaratory judgment finding that any future foreclosure action is barred. The Odens also sought a preliminary injunction under Rule 65 of the Arkansas Rules of Civil Procedure (2019) to prohibit Ocwen from taking any future action to enforce the loan.
Ocwen answered and pled the following affirmative defenses: (1) failure to state facts sufficient to constitute any cause of action against it; (2) failure to mitigate damages; (3) no duty to the Odens was owed or breached; (4) Ocwen's acts or omissions were not a proximate cause of the loss or damages for which the Odens sought recovery; (5) any damages to the Odens were proximately contributed to or caused by the neglect of others not subject to Ocwen's control and were not caused by Ocwen; (6) equitable tolling; (7) the statute of limitations ceased to accrue because Ocwen or their predecessors in interest abandoned the acceleration by attempting to collect less than the accelerated amount of the debt; and (8) the Odens reaffirmed the debt. Ocwen supplemented its answer with the affirmative defenses that it had an equitable lien against the property and setoff or recoupment.
On September 10, 2018, Ocwen moved for summary judgment that the note remained enforceable because (1) the lenders had abandoned the prior acceleration of the debt; (2) payment of taxes revived the debt; and (3) equity prevents the Odens from recovering a windfall as a result of their failure to pay the debt. In its brief, Ocwen alleged that after it acquired servicing, Ocwen sent many demands for payment that were less than the total accelerated debt. Ocwen attached several documents entitled "Delinquency Notice" that had been sent to the Odens on June 16, July 23, August 18, October 22, November 17, and December 16, 2015; and January 19, and February 18, 2016. Each notice contains the number of days since the date the loan had become delinquent, December 2, 2010, and states a total amount necessary to be paid to bring the loan current. For example, the notice of January 19, 2016, states that the Odens were 1875 days delinquent and owed $71,031.12 to bring the loan current. Also attached to the motion is a pre-foreclosure referral letter dated January 4, 2016, from Ocwen stating that the mortgage was past due and that "the property may be referred to foreclosure after 14 days from the date of this letter." The letter alleged that as of December 28, 2015, the Odens owed $68,908.58 in order to reinstate the loan. Also attached is a notice of acceleration of loan maturity dated March 25, 2016, addressed to Travis Oden, and it alleged that the note was accelerated effective as of that date because of the default.
The Odens responded to the summary-judgment motion and filed their own motion for summary judgment, arguing that Ocwen failed to enforce the note within five years of the debt being accelerated. Attached to the motion were exhibits including Travis Oden's affidavit that he had paid the property tax and homeowners insurance and tax receipts for years 2014 (paid by the Odens); and 2015, 2016, and 2017 (paid by Ocwen).
The circuit court granted the Odens summary judgment on March 14, 2019. The court found in part:
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